University of the Philippines College of Law
Topic Comparison with Police Power and Eminent Domain
Case Name Matalin v Mun. Council of Malabang
Ponente Yap, j.
DOCTRINE
Since the enactment of the Local Autonomy Act, a liberal rule has been followed by this Court in
construing municipal ordinances enacted pursuant to the taxing power granted under Section 2
of said law. The grant of power to tax under the said provision is sufficiently plenary to cover
“everything, excepting those which are mentioned” therein, subject only to the limitation that the
tax so levied is for public purposes, just and uniform.
Null and void if: Unjust, Unreasonable, Excessive, Confiscatory
RELEVANT FACTS
Invoking Sec 2 of RA 2264 (Local Autonomy Act/LCA), the Municipal Council of Malabang,
Lanao del Sur enacted Mun. Ordinance imposing a police inspection fee of P0.30 per sack of
cassava which shall be paid by the shipper before the same is transported or shipped outside
the municipality.
The ordinance was challenged by Matalin Coconut Inc in a petition for declaratory relief, arguing
that the ordinance is null and void for being ultra vires and unreasonable, oppressive and
confiscatory.
The Trial Court decided that the municipal ordinance is null and void and it ordered the Municipal
Treasurer to refund to Matalin its payments under protest made pursuant to the ordinance.
Municipal Council appeals.
ISSUE AND RATIO DECIDENDI
Issue Ratio
W/N the municipal YES
ordinance is null and void
Since the enactment of the Local Autonomy Act, a liberal rule has
been followed by this Court in construing municipal ordinances
enacted pursuant to the taxing power granted under Section 2 of
said law. The grant of power to tax under the said provision is
sufficiently plenary to cover “everything, excepting those which are
mentioned” therein, subject only to the limitation that the tax so
levied is for public purposes, just and uniform.
In this case, the police inspection fee partakes of the nature of a
tax because its purpose is to raise revenue.
University of the Philippines College of Law
TC ruled that the police inspection fee is a percentage tax
on sales which is beyond the scope of the municipal
authority to levy under Sec 2 of LCA1 and thus struck it down
as null and void.
But this is not correct. The tax imposed under the ordinance
in question is not a percentage tax on sales or any other
form of tax based on sales. It is a fixed tax of P.30 per bag
of cassava starch or flour “shipped out” of the municipality.
It is not based on sales.
Still, the ordinance can be stricken down for being unjust and
unreasonable.
The reason for imposing the tax is because of the service
rendered by the police in:
1. Verifying the number of bags loaded per trip which
are to be shipped out of the municipality for the
purpose of computing the total amount of tax to be
collected;
2. Inspecting the cassava starch flour if fit for human
consumption
3. Protecting the truck and its cargoes from molestation
Only purpose #1 is proven to be true. Re: #2 – police is not
competent to make such inspection. Re: #3 – Matalin did
not ask for police protection because there were no
occasions of molestations.
The inspection fee of P0.30 is also excessive and confiscatory.
It has been shown by Matalin that it is realizing a mere
marginal average profit of P0.40 per bag of cassava flour.
Imposing the inspection fee would constrain them to close
business.
RULING
WHEREFORE, …
SEPARATE OPINIONS
NOTES
1
municipal districts are prohibited from imposing” any percentage tax on sales or other taxes in any form based thereon
